What E-Commerce Businesses Should Consider in Supply Chain Management

E-commerce is fundamentally unique from other industries and so are its supply chain needs. As supply and demand are impacted by seasonality, availability, and unpredictable trends, e-commerce companies need to be ready to meet and adapt to market challenges at the drop of a hat. Here’s what you need to know about your e-commerce supply chain to achieve business goals and prepare your operation for future challenges.

Planning

Effective planning involves forecasting customer demand, inventory levels, and the movement of products. A plan ensures that resources are being allocated correctly, from reducing overstock to ensuring enough packaging materials on hand to fulfill orders. Careful planning can also help e-commerce businesses maintain high customer satisfaction through consistent product availability and timely deliveries, regardless of market changes.

Sourcing

Sourcing is defined as the process of identifying suppliers and obtaining the materials needed to meet customer demand. Choosing the right suppliers not only impacts product quality, but also the overall cost structure of your business. Effective sourcing helps maintain product consistency and reliability, which are crucial for building customer trust.

Production

For e-commerce businesses that manufacture their own products, the production phase is a fundamental component of their supply chain. This step involves the actual creation of products and inventory management. Maintaining an efficient production process is necessary for satisfying customer expectations.

Distribution

The distribution stage includes the movement of products from the production or storage facilities to the customers' doorstep. E-commerce businesses must select the right distribution channels and carriers to ensure timely, cost-effective deliveries. The distribution phase plays a direct role in the customer experience, impacting factors like shipping times, order accuracy, and the condition of delivered products.

Returns

The final fundamental stage handles customer returns. Whether it’s due to product defects or just a change of mind, a well-organized return system ensures that the business maximizes the value of returned items while also providing a positive experience for customers. E-commerce businesses must inspect returned products, determine their condition, and decide whether to restock, refurbish, or dispose of them.

Common Challenges

Since your e-commerce business is different from other industries, it's important to recognize the common challenges within your supply chain and have a plan in place to help control them.

Reverse Logistics

Reverse logistics is when a pallet moves from a business back to the pallet supplier. Through a continuous loop, the pallets are picked up from companies, examined for quality control, and placed back into circulation. Managing returns and reverse logistics presents unique challenges for businesses of all types and sizes, but especially when it comes to e-commerce supply chains. The ease of online returns has made it common for customers to send back products for various reasons, from product defects to buyer's remorse. Successful reverse logistics can lead to lower operational costs and enhanced supply chain efficiency, turning potential challenges into opportunities to boost customer satisfaction and recover value from returned goods.

At Relogistics, a reverse logistics review is the first step in designing a supply chain management system to reduce your costs. See how we work with your business to find opportunities for efficiency and tailor them to your unique needs.

Demand Forecasting

Increased online sales and shipping demands can create problems for businesses that don't have efficient processes in place to keep up. E-commerce businesses often encounter demand changes due to factors like seasonality, promotional events, and consumer needs. Accurate demand forecasting considers historical data, market trends, and external factors. Meeting this challenge allows online retail businesses to align their supply chains with actual demand, reducing costs, improving customer satisfaction, and ensuring products are consistently available to meet customer expectations.

Warehouse worker in safety gear using a tablet to manage logistics and track packaging assets for efficient supply chain operations.

When you partner with Relogistics, we track every movement of your packaging assets so we can ensure they're properly cared for, compensation is fair, and costs are as low as possible.

Pallet Management

The core of streamlining operations and processes comes down to pallet management, especially in e-commerce where businesses handle a diverse range of products. This often makes the standardization of pallet types and sizes difficult, since you need to consider the efficient storage of products in warehouses and the secure transportation of goods to customers. Some products might need smaller pallet dimensions, while others might need a pallet that will hold more weight. Finding the right balance is essential, as the wrong pallet can lead to wasted storage space, damaged products, and increased shipping costs.

Learn more about how Relogistics helped an e-commerce division of a major retailer save $2.7 million with total pallet management services.

Dock Space Management

Dock space management is an intricate challenge in e-commerce supply chains. Limited dock space can result in delays and impact the efficiency of your entire supply chain. E-commerce businesses must optimize their dock space to accommodate inbound and outbound shipments, often from a variety of carriers and suppliers. Efficient dock space management involves scheduling arrivals, departures, and unloading times to reduce congestion and ensure seamless product flow. Maintaining site and dock sanitation throughout your facility is also required to stay in compliance with FDA/USDA guidelines. Solving this challenge helps e-commerce businesses minimize wait times, lower shipping costs, and enhance overall supply chain throughput, ultimately ensuring timely deliveries to customers.

Applying Six Sigma methodologies, Relogistics offers a strategic approach to dock space management that significantly reduces errors and boosts efficiency. Learn more about our comprehensive approach which includes customized site assessments that pinpoint areas for improvement and outline a clear plan of action for tangible results.

What to Consider

When it comes to selecting a supply chain management partner for your e-commerce business, there are a number of different factors to consider.

Pallet Types

Selecting the right pallet is a critical consideration in e-commerce supply chain management. E-commerce businesses often handle a wide variety of products, ranging from small, fragile items to large and heavy goods. Pallets should be chosen based on the specific characteristics of the products they will carry. For smaller, lightweight items, smaller pallets might be more efficient, while larger, bulkier products require larger and more robust pallets. Pallet choice can also impact warehouse storage, transportation, and ease of handling.

Wooden pallets stacked in a warehouse, featuring a mix of natural and red-painted pallets, illustrating essential pallet types for e-commerce supply chain management.

Industry Knowledge

In the complex landscape of e-commerce supply chain management, industry knowledge is crucial. Pallet suppliers and logistics partners must possess a deep understanding of the specific requirements and challenges of the e-commerce sector. These supply chains often handle a diverse mix of products, requiring expertise in secure and efficient pallet solutions. This knowledge extends to considerations like safe storage, transportation, automation, and handling practices.

Sustainability

Customers are placing a greater emphasis on eco-friendly practices, making it necessary for e-commerce businesses to consider the environmental impact of their operations. Sustainable recycled wooden pallets are not only environmentally responsible but can also enhance a company's image. Evaluating the entire lifecycle of pallets, from production to disposal, is critical for making sustainable choices in e-commerce supply chain management.

Director of ESG Jess Bonsall shares more about how our data-driven approach provides transparent and accountable results to our customers, ultimately helping to support their sustainability initiatives.

On-Time Delivery

On-time delivery of pallets is an important aspect of e-commerce supply chain management. Delays in receiving pallets can lead to disruptions and inefficiencies throughout the supply chain, affecting both storage and distribution. On-time delivery of pallets is essential to maintaining the smooth flow of e-commerce supply chain operations, reducing lead times, and ensuring that products reach customers according to promised delivery schedules. Reliable and responsive pallet suppliers are instrumental in meeting the time-sensitive demands of e-commerce operations.

Benefits

Choosing the right supply chain management partner can have significant benefits to your e-commerce business and bottom line.

Improved Customer Satisfaction

Effective planning involves forecasting customer demand, inventory levels, and the movement of products. A plan ensures that resources are being allocated correctly, from reducing overstock to ensuring enough packaging materials on hand to fulfill orders. Careful planning can also help e-commerce businesses maintain high customer satisfaction through consistent product availability and timely deliveries, regardless of market changes.

Competitive Advantage

In a highly competitive market, where consumers have numerous options at their fingertips, offering quicker deliveries, better prices and more reliable service can set a business apart from the competition. An efficient supply chain allows businesses to adapt to market changes, respond quickly to consumer trends, and provide a seamless customer experience. This competitive edge can lead to increased market share and sustained growth, ultimately contributing to the long-term success of the e-commerce business.

Reduced Operational Costs

Through optimized inventory management, streamlined warehousing, efficient transportation methods, and well-planned distribution strategies, e-commerce businesses can minimize overhead expenses. Overstock and understock situations are kept in check, contributing to better cash flow and reduced carrying costs. Lower shipping costs, through improved logistics and transportation, create higher profitability. These cost savings can be reinvested into the business, used to enhance customer experiences, or increase profit margins, ultimately improving the bottom line and financial sustainability of the e-commerce business.

Need Help with Your E-Commerce Supply Chain?

If you’re an e-commerce business looking to improve your warehouse or distribution center operations – whether that’s pallet and tote sortation and repair, cardboard box building, unloading trucks, and more – Relogistics has the resources to improve your supply chain.

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